Gale Warning

Telltale signs have been with us for the past few months, but in the past few days it’s become obvious: the airline industry is getting ready to batten down the hatches and do everything it can to weather rising energy prices. For airline customers it means fewer available seats and much higher fares.

The obvious culprit for rising energy prices is the civil unrest in the Middle East, but there’s more to it. Look at what’s been happening to the spot price of a gallon of jet fuel since last September:

Aug 30: $2.059

Sept 13 : $2.129

Oct 4: $2.226

Nov 8: $2.372

Dec 6: $2.439

Jan 18: $2.663

Feb 22: $2.880

Feb 28: $2.998

March 2: $3.147

Want to know why fares are going up? You’re looking at it.

In the past week and half we’ve heard rumblings that the airlines will make big third quarter cuts in capacity (meaning number of seats in the air). Fewer seats means higher fares.

In a sure sign that interesting times are ahead, Allegiant said this in a letter to the Department of Transportation (DOT):

"Allegiant is considering a new pricing option for use on its website: when making a purchase, consumers would be able to choose between a traditional "locked in" fare that would not fluctuate, and a lower fare that could change before the date of travel. That lower fare could be reduced further or could increase (up to a set maximum that would be clearly disclosed) depending on changes in fuel price between the booking and travel dates. This would be a non-compulsory alternative for consumers; it would provide them another option for potential substantial savings on their trip costs and would be clearly disclosed and explained prior to any purchase."

Is this going to happen — will you be able to purchase a floating fare? Last year the DOT wrote consumer protection rules that are still just proposals. These proposed rules would forbid floating fares. Allegiant is trying to make a case for them now before the proposals become law: